There are all kinds of rules that apply to your estate plan--rules about taxes, about who can be written out of your estate plan, about assuring that the things you leave behind will end up in the hands of your chosen beneficiaries, and even default rules about what will happen if you do not document your estate plan.
Perhaps the most important rule to keep in mind is that to a very great extent, you can write the rules about what will happen to you and to your assets if you ever lose the ability to make decisions--either because of incapacity or death. Your estate plan is your personal rulebook to cover those eventualities.
The following is a true, factual scenario that could have been avoided by the right rulebook:
Est8Planning Counsel LLLC
Scott A. Makuakane and Roya J. Deyhim · Estate Planning Attorneys
Mom died without a Will, survived only by Daughter. The applicable default rules provided that Daughter was Mom's sole heir. Daughter died 35 days later, also without a Will. Daughter had no kids or spouse, which meant that her sole heir was Dad, who had divorced Mom and married Mistress 44 years earlier. Dad died without a Will two weeks before the distribution from Daughter's estate, leaving Mistress as his sole heir.
Bottom line: Mom's entire estate went to the last person she would have wanted to receive it.
Mom could have easily avoided this result by signing a Will that left everything to Daughter, provided Daughter outlived her by more than 60 days, and if not, to Mom's Favorite Charity. By not having a very simple rulebook in place, Mom allowed her estate to go someone whom she never intended.
In addition to a Will, most of us would be well advised to have in place an advance health-care directive (AHCD), a Health Insurance Portability and Accountability Act (HIPAA) authorization and a durable power of attorney (DPA). The AHCD and HIPAA authorization allow your handpicked, substitute decision-makers to talk with your physicians and make healthcare decisions for you (including end-of-life decisions) if you are unable to communicate your own wishes. The DPA allows your handpicked, substitute decision-makers to deal with your bank accounts and other assets in the event that you are incapacitated and unable to pay your own bills.
Depending on your circumstances, your rulebook may include other documents as well, such as one or more trust agreements. Having a well thought-out rulebook is one way to rest assured that your wishes will be followed when you are no longer to express them in person.
Scott A. Makuakane and Roya J. Deyhim are estate planning attorneys with the law firm of Est8Planning Counsel LLLC. Contact Est8Planning Counsel LLLC at 891-8881 or www.est8planning.com.